© Archyde.com. FILE PHOTO: The Bank of Israel building is seen in Jerusalem June 16, 2020. REUTERS/Ronen Zvulun/File Photo
JERUSALEM (Archyde.com) – The Bank of Israel on Monday raised its benchmark interest rate by another half a percentage point, the eighth straight meeting it has increased rates to try to rein in inflation that remains above 5%.
The central bank lifted its key rate to 4.25% – its highest level since late 2008 – from 3.75%. In April, policymakers began raising the rate from 0.1% and have been aggressive during a front-loading process, but most analysts believe the tightening cycle is close to over.
Despite the rate hikes, Israel’s annual inflation rate rose to a 14-year high of 5.4% in January from 5.3% in December – well above the government’s 1%-3% annual target range and fuelling public anger at spiking living costs.
At the same time, Israel’s economy grew a faster than expected 6.5% in 2022, although growth is expected to slow to below 3% this year amid the steep rate hikes.
A Archyde.com poll had found that nine of 15 economists had expected a 25 basis points move, while six others foresaw a 50 basis point hike.